Sub-project 1b: Long-run aspects of inequality

Description

Most assessments of economic inequality (including the one in 1a) focus on outcomes of individuals and households during single years. However, many dimensions of welfare concern outcomes over longer time frames. We are, for example, more concerned with the well-being of people experiencing lasting periods of low income and chronic risk of poverty than those exposed only to temporary spells due to, e.g., periods in full-time education. Furthermore, the degree of intragenerational wealth mobility is important as it reflects the extent to which there is equality of opportunity in a society. We will use rich and newly-available Swedish administrative datasets that allow scholars to follow individuals over time and to measure long-run inequality, as well as Dutch register data.

First we will analyse gender patterns in income mobility and investigate whether female top incomes are more temporary or permanent than male top incomes. Are women in the top predominantly the heirs of large fortunes that yield high capital incomes? How important are educational attainment or fertility patterns for women’s career prospects? There is little previous research on female top incomes and the paths women follow to become high-income earners. Recent studies have analysed gender wage gaps and found evidence of a glass-ceiling on the Swedish labour market, particularly among high earnings (Albrecht et al., 2003). However, top incomes are to a large extent made up by capital incomes (Atkinson, Piketty and Saez, 2011) and, in their study of the richest individuals in the US, Edlund and Kopczuk (2009) found that inherited capital was predominant among rich women whereas labour-related entrepreneurial fortunes dominated among rich men.

Second, we will analyse the degree of intragenerational wealth mobility, which is important, as it reflects the extent to which there is equality of opportunity in a society. Several factors affect the lifecycle profile of wealth holdings and intragenerational mobility, including unequally distributed inherited wealth. Previous literature on intragenerational wealth mobility includes Hurst et al. (1998), Jianakoplos and Menchik (1997), Keister (2005), and Steckel and Krishnan (2006) who all study wealth mobility in the US; Jappelli and Pistaferri (2000) who study Italy; and Klevmarken et al. (2003) and Klevmarken (2004) who look at Sweden. Most studies find that the probabilities to stay poor or to remain wealthy are high, and that wealth mobility is greatest in the middle of the wealth distribution. The previous literature is mostly based on survey data, which tend not to cover well the top percentiles of the wealth distribution, and to have few observations across an individual’s life, leading to coarse measures of mobility. We will use data from an administrative Swedish source with wealth information from tax registers for a large sample of households over almost 40 years. Our preliminary analysis (Hochguertel & Ohlsson, 2012) found substantial movements into and out of the top percentiles of the wealth distribution when individual households are followed for long periods. The work within this project will focus on what determines if an individual household moves to and stays in the top of wealth distribution. The Swedish data will be studied alongside with wealth data from Dutch tax registers spanning 1999-2010.

Researchers

Professor Henry Ohlsson, Professor of Economics, Uppsala University, henry.ohlsson@nek.uu.se

Professor Daniel Waldenström, Professor of Economics, Uppsala University, Daniel.waldenstrom@nek.uu.se

Dr Stefan Hochguertel, Associate Professor, University of Amsterdam, s.hochguertel@vu.nl

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest